Bombardier CEO: We were overwhelmed

Bombardier was "overwhelmed" by its development programs, the
company's CEO said after the jet and train maker announced a
massive write-down.

The company is taking a $4.4 billion charge, mostly related to
its larger C-Series jet, which is meant to compete with Boeing's
737 and Airbus' A320 in the medium-range airliner market.

That jet, which Bombardier decided it would build in 2004, has
been
beset by cost overruns and delays. More than a decade after
it was conceived, the aircraft still isn't in commercial
service.

The company reported a loss of $4.9 billion for the quarter. The
write-down includes a $1.2 billion charge for the Lear85 project,
which the company has canceled. Bombardier also confirmed
reports that the Quebec government would inject $1 billion
into the C-Series program.

The company's shares fell 15% after the results, adding to a
decline that has already wiped away two-thirds of Bombardier's
market value this year. During the
third-quarter earnings call, one analyst asked just how the
company got to this point financially.

"It's not as bad as people think," Bombardier
CEO Alain Bellemare said. "We had multiple development programs
running concurrently, and that was challenging for the company.
The company was overwhelmed."

The CEO added that most of those programs were complete, near
completion, or canceled.

"Bombardier needs to the get the plane into service, prove that
it is successful, and generate more demand if it wants to correct
its cash flow shortage," Moody's analyst Darren
Kirk said before Thursday's results.

Bombardier said on Thursday that the C-Series program was
expected to be cash-flow positive around 2020 — but
would require an additional $2 billion to get there.

Not fast enough

With the jet scheduled to enter service next year, the company
has 243 firm orders on the books.

Bombardier's
shares.Google

The concern, however, is that those orders aren't coming fast
enough. A whole year has come and gone since Bombardier last
announced a new buyer for the C-Series, and one of its largest
buyers so far, Republic Airways, could be about to bolt.

"The Republic Airways planes are never going to be delivered to
Republic," Airways News senior business analyst Vinay Bhaskara
said in an interview ahead of the results.

In June, Bombardier flew both the CS100 and the larger CS300 to
the Paris Air Show. The planes arrived at Le Bourget airport with
great fanfare but left without booking a single new order.

The painful thing for Bombardier is that there's nothing
wrong with the airplane. In fact, the C-Series has garnered
generally positive reviews.

"The CS300 kills the Boeing 737 Max 7 and the Airbus A319neo in
terms of ability and efficiency," Bhaskara said.

Bombardier CS300 in Republic Airways
livery.Bombardier

At the Paris Air Show, the aircraft leasing company Air Lease
Corporation's president and CEO, John Plueger, told The Seattle Times that it was not
enough for people to like the plane — Bombardier needed orders.

It's a stark contrast to Bombardier's other aircraft. The
company's CRJ-Series regional jets are among the most in-demand
aircraft of their type, with nearly 2,000 examples in
service. Its Q-Series turboprop airliner is a staple of regional
airlines around the world, with more than 1,000 of the planes in
service. That's on top of the company's iconic Challenger,
Global, and Learjet families of private jets.

Part of the problem is that the C-Series is tapping a part of the
market that the world's largest aircraft makers have deemed
unworthy because of thin profits. Boeing and Airbus discontinued
their regional jets, the 737-600 and A318.

All may not be lost.

Bombardier C-Series at the
Paris Air Show.REUTERS/Pascal
Rossignol

Analysts such as Bhaskara predict room for as many as 2,500
planes in the 100- to 150-seat jet category, and Bloomberg
recently reported that Bombardier was in talks about a possible
order with JetBlue Airways.

Another major buyer, according to Bloomberg, could be United
Airlines, which told pilots it planned to order small jetliners,
Bloomberg also reports.

There's also room for the C-Series to recover as the older Boeing
and Airbus aircraft are phased out and need to be replaced, said
Tom Capital, Deloitte's vice chairman and head of global
aerospace and defense.

"Boeing and Airbus are focusing on larger aircraft with longer
range," Captain said. "This has left an opening
for others such as Bombardier to come in with new and efficient
equipment."

The trick for Bombardier now is to turn that optimism into actual
orders. And fast.